YATRA ART FUND II, CHENNAI V. ASST CIT CEN CIR 44`, MUMBAI

ITA 3720/MUM/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4020 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2016
• Appeal Filed By: Assessee
• Bench Allotted: G
• Next Hearing Date: 19-01-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 23-05-2014
• Court: TRIBUNAL
• Assessee Lawyers: J PRABHAKAR
• Keywords: Principle of natural justice
• Section: 143(3)

Judgement Text

, , G, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.3720/MUM/2014 ASSESSMENT YEAR: 2009-10 YATR A ART FUND II, J. PRABHAKAR CAS, RESIDENCY APARTMENT, 245, T.T.K. RD, ALWARPET CHENNAI-600018 / VS. ASST CIT CIR 44 MUMBAI (ASSESSEE ) (REVENUE) P.A. NO. AAATY1545J / ASSESSEE BY SHRI J. PRABHAKAR (AR) / REVENUE BY SHRI NITIN WAGHMODE (DR) / DATE OF HEARING : 19/01/2016 / DATE OF ORDER: 12/02/2016 / O R D E R PER ASHWANI TANEJA (ACCOUNTANT MEMBER): THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-3 8, MUMBAI {(IN SHORT CIT(A)}, DATED 24.02.14 FOR TH E ASSESSMENT YEAR 2009-10, PASSED AGAINST THE ASSESSMENT ORDER P ASSED BY THE ASSESSING OFFICER (IN SHORT AO) U/S 143(3) OF THE ACT. YATRA ART FUND 2 2. DURING THE COURSE OF HEARING, ARGUMENTS WERE MADE B Y SHRI J. PRABHAKAR, AUTHORISED REPRESENTATIVE (AR) O N BEHALF OF THE ASSESSEE AND BY SHRI NITIN WAGHMODE, DEPARTMENT AL REPRESENTATIVE (DR) ON BEHALF OF THE REVENUE. 3. IN THIS APPEAL, THE ASSESSEE HAS RAISED AS MANY A S 13 GROUNDS, BUT EFFECTIVELY ONLY TWO ISSUES HAVE BEEN RAISED. THE FIRST ISSUE RAISED BY THE ASSESSEE IS THAT ASSESSME NT WAS MADE UPON THE ASSESSEE U/S 161 AS REPRESENTATIVE ASSESSE E, WHEREIN STATUS WAS MENTIONED IN THE ASSESSMENT ORDE R AS TRUST. THE ASSESSEE CONTENDED BEFORE THE LD. CIT( A) THAT THE ASSESSEE IS A PRIVATE TRUST IN WHICH SHARES OF EACH OF THE BENEFICIARIES IS DETERMINATE AND THEREFORE, SEPARAT E ASSESSMENT SHOULD HAVE BEEN MADE WITH RESPECT TO EA CH OF THE BENEFICIARIES. THE LD. CIT(A) ACCEPTED THE CONTENTI ON OF THE ASSESSEE IN PRINCIPLE BUT WHILE ADJUDICATING THE AP PEAL, THE GROUNDS RAISED BY THE ASSESSEE WAS ERRONEOUSLY DISM ISSED. IT WAS POINTED OUT THAT THERE WAS AN INHERENT CONTRADI CTION IN THE ORDER OF THE LD. CIT(A). 3.1. THE OTHER ISSUE RAISED BY THE LD. COUNSEL DURING T HE COURSE OF HEARING IS THAT DISALLOWANCE WAS MADE U/S 40(A)(2)(B) BY THE AO ON AD-HOC BASIS FOR AN AMOUNT OF RS.48,66,218/- OUT OF TOTAL AMOUNT OF RS.73,66,218/ - BEING ADVISORY FEES PAID TO M/S. SYNERGY ARTS FOUNDATION LTD. IN WHICH TRUSTEES OF THE ASSESSEE WERE DIRECTORS. THE ASSESSEE SUBMITTED DOCUMENTARY EVIDENCES BEFORE THE LD. CIT( A). THE LD. CIT(A) CALLED FOR REMAND REPORT OF THE AO BUT W HILE YATRA ART FUND 3 ADJUDICATING THE APPEAL INSTEAD OF CONSIDERING THE EVIDENCES OF THE ASSESSEE, LD. CIT(A) IGNORED THE EVIDENCES AND ENHANCED THE DISALLOWANCE BY DISALLOWING THE ENTIRE PAYMENT OF RS.73,66,218/- BEING THE TOTAL AMOUNT PAID TO THE A FORESAID COMPANY. IT WAS SUBMITTED THAT THERE WAS GROSS VIOL ATION OF PRINCIPLES OF NATURAL JUSTICE AND GRAVE INJUSTICE W AS DONE WITH THE ASSESSEE. 3.2. DURING THE COURSE OF HEARING, LD. DR INITIALLY OPP OSED THE SUBMISSIONS OF THE LD. COUNSEL BUT SUBSEQUENTLY HE WAS FAIR ENOUGH TO EXPRESS HIS NO OBJECTION FOR SENDING THIS MATTER BACK TO THE FILE OF THE LD. CIT(A) FOR DECIDING THE SE ISSUES AFRESH AFTER CONSIDERING ALL THE EVIDENCES PROPERLY . 3.3. WE HAVE GONE THROUGH THE ORDERS OF THE LOWER AUTHO RITIES VERY CAREFULLY. AS FAR AS, FIRST ISSUE IS CONCERNED , WE FIND THAT THERE IS APPARENTLY A SELF-CONTRADICTION IN THE ORD ER OF LD. CIT(A). THE RELEVANT PARA OF HIS ORDER IS REPRODUCE D BELOW: IN THE CASE OF A SPECIFIC TRUST, THE ASSESSMENT HA S TO BE MADE IN THE HANDS OF THE TRUSTEE REPRESENTING TH E BENEFICIARIES. THE ASSESSMENT OF THE TRUSTEE WOULD HAVE TO BE MADE IN THE SAME STATUS OF THE BENEFICIARY, W HOSE INTEREST IS SOUGHT TO BE TAXED IN THE HANDS OF THE TRUSTEE. THE SUPREME COURT IN THE CASE OF H.E.H NIZAM'S FAMI LY (REMAINDER WEALTH) TRUST [108 ITR 555] PERMITTED ON E CONSOLIDATED ASSESSMENT ORDER AND IN SUCH ORDER, TH E TAX DUE IN RESPECT OF EACH BENEFICIARY WILL HAVE TO BE SPECIFIED YATRA ART FUND 4 SEPARATELY. IN THIS CASE, THE BENEFICIARIES ARE IND IVIDUALS AND COMPANIES AND IF ONE CONSOLIDATED ASSESSMENT HA S TO BE MADE, THEN THE STATUS WILL HAVE TO CHANGE ACCORD ING TO THE BENEFICIARY AND IN THESE CIRCUMSTANCES, THE A.O MERELY MENTIONING ITS STATUS AS TRUST CANNOT BE FAULTED WI TH. FURTHER, THOUGH THE A.O HAS NOT ALLOCATED THE SHARE OF PROFIT TO EACH BENEFICIARY SINCE THE PROFIT SHARING RATIOS WERE NOT KNOWN, HOWEVER, THE A.O INHERENTLY MEAN TO ALLOCATE THE PROFIT IN THEIR PROFIT SHARING RATIOS. IN VIEW OF THE ABOVE, I AM OF THE OPINION THAT THE REFERENCE T O 'TRUST' AS STATUS OF THE APPELLANT IS A CURABLE DEFECT AND THE SHARE OF PROFIT IS DEEMED TO HAVE BEEN ALLOCATED. THEREFO RE, THIS GROUND OF APPEAL IS NOT ENTERTAINED. 3.4. IT IS NOTED FROM THE PERUSAL OF THE AFORESAID PARA THAT LD. CIT(A) HAS PRINCIPALLY ACCEPTED THE CONTENTION OF TH E ASSESSEE THAT IN VIEW OF JUDGMENT OF HONBLE SUPREME COURT I N THE CASE OF H.E.H. NIZAMS FAMILY TRUST, (SUPRA) THAT TAX DU E IN RESPECT OF EACH BENEFICIARY WAS TO BE COMPUTED SEPARATELY, KEEPING IN VIEW THE STATUS OF EACH BENEFICIARY SEPARATELY. BUT WHILE ADJUDICATING THE GROUND, THE ORDER OF LD. AO WAS UP HELD AND GROUND RAISED BY THE ASSESSEE WAS DISMISSED, INSPI TE OF THE FACT THAT NEITHER THE TAX DUE WITH RESPECT TO EACH BENEFICIARY WAS COMPUTED SEPARATELY, NOR RELEVANT STATUS OF EAC H BENEFICIARY WAS TAKEN INTO CONSIDERATION. IT HAS BE EN CONTENDED BY THE LD. COUNSEL THAT FOR THIS PURPOSE SEPARATE ASSESSMENT ORDER MAY BE REQUIRED TO BE PASSED WITH RESPECT TO EACH BENEFICIARY. WE FIND THAT THE REASONING GIVEN BY LD. YATRA ART FUND 5 CIT(A) AND THE CONCLUSION DRAWN ON THE BASIS OF THE SAME ARE AT VARIANCE WITH EACH OTHER. 3.5. SIMILARLY WITH REGARD TO THE SECOND ISSUE OF DISAL LOWANCE MADE BY THE AO U/S 40A(2)(B), IT IS NOTED BY US THA T JUSTICE HAS NOT BEEN DONE WITH THIS CASE. DURING THE COURSE OF HEARING, IT WAS SUBMITTED BY THE LD. COUNSEL APPEAR ING ON BEHALF OF THE ASSESSEE THAT WHATEVER WAS REQUIRED B Y THE AO OR BY LD. CIT(A), THE SAME WAS PROVIDED, HOWEVER, REMA ND REPORT WAS SUBMITTED BY THE AO WITHOUT GIVING ANY OPPORTUN ITY. IN CASE ANYTHING MORE IS REQUIRED, THE SAME CAN BE VER Y WELL SUBMITTED. THE ONLY PRAYER OF THE ASSESSEE IS THAT ADEQUATE OPPORTUNITY OF HEARING SHOULD BE GIVEN AND ALL THE DOUBTS AND REQUIREMENTS SHOULD BE PUT TO THE ASSESSEE AND ADEQ UATE TIME SHOULD BE GIVEN TO COMPLY WITH THE REQUIREMENTS. 3.6. KEEPING IN VIEW ALL THE FACTS AND CIRCUMSTANCES OF THE CASE AND SUBMISSIONS MADE BY BOTH THE PARTIES BEFO RE US, WE FIND IT APPROPRIATE TO SEND BOTH THE ISSUES BACK TO THE FILE OF THE LD. CIT(A) FOR PROPER ADJUDICATION OF THE SAME. IT IS DIRECTED THAT LD. CIT(A) SHALL CONSIDER ALL THE EVI DENCES AS MAY BE PLACED BY THE ASSESSEE OR AS MAY BE REQUIRED BY THE LD. CIT(A), AS PER LAW AND FACTS. THE LD. CIT(A) MAY CA LL FOR REMAND REPORT FROM THE AO, IF SO DESIRED. THE AO SH ALL GIVE ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE BE FORE SENDING REMAND REPORT TO THE LD. CIT(A). THE ASSESS EE SHALL EXTEND REQUISITE COOPERATION TO BOTH THE AUTHORITIE S BY SUBMITTING REQUIRED DETAILS AND DOCUMENTS, FOR WHIC H YATRA ART FUND 6 ADEQUATE OPPORTUNITY SHALL BE GRANTED TO IT. THE AS SESSEE IS PERMITTED TO RAISE ANY LEGAL AND FACTUAL ISSUE BEFO RE THE LOWER AUTHORITIES WITH RESPECT ALL THE GROUNDS RAISED BEF ORE US. THUS, WITH THESE DIRECTIONS, GROUNDS RAISED BEFORE US ARE SEND BACK TO THE FILE OF THE LD. CIT(A). 4. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS TRE ATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 12. 02.2016. SD/- (SAKTIJIT DEY) SD/- (ASHWANI TANEJA) ! / JUDICIAL MEMBER '! / ACCOUNTANT MEMBER MUMBAI; DATED : 12/02/2016 CTX? P.S/. .. # $%&'&($ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !'# / THE RESPONDENT. 3. $# $# % ( ) / THE CIT, MUMBAI. 4. $# $# % / CIT(A)- , MUMBAI 5. ()* # !+ , $# # +- , / DR, ITAT, MUMBAI 6. *. / GUARD FILE. / BY ORDER, '#( ! //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI